10/12/2012

TALLAHASSEE— As part of his mission to help create conditions that foster a prosperous economic environment, Florida Chief Financial Officer Jeff Atwater partnered with the Florida Chamber Foundation in June to survey community banks and credit unions on critical economic issues impacting Florida’s small businesses. Today, CFO Atwater and Dale A. Brill, Ph.D., president of the Florida Chamber Foundation announced the results of the 2012 Small Business Lending Survey.

“After meeting with small businesses over the past 18 months, I became increasingly concerned about the relationship between small businesses and their primary lending institutions,” said CFO Atwater, who confirmed that while community banks and credit unions hold 10 percent of all banking assets, they are responsible for 40 percent of all the loans to small businesses nationally. “In the federal government’s attempt to crack down on bad lending practices, small community lenders have become the collateral damage, drowning in ever-increasing compliance costs. Our survey found that lending to small businesses, consequently, has been stifled, restricting access to capital. And with businesses’ inhibited ability to hire, Florida workers are ultimately paying the price.”

Specifically, the survey found that 96 percent of community banks and credit unions expect to spend considerably more time and money on compliance with new federal regulation over the next three years. Furthermore, 64 percent of community banks and credit unions said their lending to small businesses over the next three years will be negatively affected by the Dodd-Frank Act. Seventy-two percent said that customer service would also be negatively impacted.

“Fears have been confirmed that government is choking capital markets rather than reviving them,” said Dale A. Brill, Ph.D., president of the Florida Chamber Foundation. “This collaborative research with CFO Atwater demonstrates that a re-evaluation of state and federal regulations—intended to end risky lending practices—is warranted.”

The survey also found that over the next three years, an overwhelming majority—99 percent—of respondents expect the Dodd-Frank Act to have a negative impact on their institution’s compliance costs. Many cited money will be spent for technology (97 percent) to deal with new reporting requirements as well as consultants (89 percent) and additional staff (88 percent) to handle compliance issues.

CFO Atwater said one of the survey respondents said it best with, “Compliance requirements divert money and time from helping customers grow and expand their businesses.”

The survey, conducted between June 15 and Aug. 10, was sent to senior management representatives of community banks and credit unions who are headquartered in Florida and have less than $5 billion in total assets. The median number of employees of all the community lenders surveyed was 37 and the median dollar amount of total assets was $210 million. The community lenders were asked a series of 18 questions pertaining to strategic challenges of small community lenders over the next three years. To find out more information about the 2012 Small Business Lending Survey or to view the full results of the survey visit http://www.myfloridacfo.com/FloridasBottomLine/docs/SmallBusinessSurvey.pdf.

The Florida Chamber Foundation is the business-led, solutions development and research organization working in partnership with state business leaders to secure Florida’s future. The Foundation’s “Six Pillars” serve as a visioning platform for developing the first-ever, long-term strategic plan for the state. The Foundation’s work focuses on: 1) Talent Supply and Education, 2) Innovation and Economic Development, 3) Infrastructure and Growth Leadership, 4) Business Climate and Competitiveness, 5) Civic and Governance Systems, and 6) Quality of Life and Quality Places. Founded in 1968, the Foundation is a critical voice for improving the state’s pro-business climate to enable Florida to grow and prosper. For more information, visit www.FLFoundation.org